News Feature | April 23, 2014

GSK And Novartis Agree On Asset Swap Worth Billions

By Marcus Johnson

GlaxoSmithKline and Novartis have announced an asset swap deal worth billions. The two companies will combine multiple brands, including Aquafresh, Beechams, and Tixylix. They will also be swapping vaccines and oncology assets.

Sir Andrew Witty, the CEO of GSK, said the deal is likely one of the first in a new age of mergers and acquisitions. In the past, he said, drug companies would acquire another business because they wanted a useful asset. In the GSK-Novartis deal, both companies got the assets that they were looking for, and that they felt would further their own operations. “I believe if you really focus the transaction on just the things you really care about you can create tremendous value in that space,” Witty said. “This proposed 3-part transaction accelerates our strategy to generate sustainable, broadly sourced sales growth and improve long-term earnings. Opportunities to build greater scale and combine high quality assets in vaccines and consumer healthcare are scarce. With this transaction we will substantially strengthen two of our core businesses and create significant new options to increase value for shareholders.”

GSK announced the deal with a press release, where the company outlined the full list of transactions:

  • GSK and Novartis will create a new world-leading Consumer Healthcare business with 2013 pro forma revenues of £6.5 billion. GSK will have majority control with an equity interest of 63.5 percent.
  • GSK will acquire Novartis’ global Vaccines business (excluding influenza vaccines) for $5.25 billion, with up to $1.8 billion coming in as potential milestone payments.
  • Novartis will be given the righs to GSK’s Oncology portfolio, related R&D activities, and AKT inhibitor. Novartis will also be given commercialization partner rights for future oncology products.
  • Transaction is expected to be completed during the first half of 2015, subject to approvals.